Five years after a failed attempt to find a CEO to replace Paul House began, Tim Hortons picks a new leader: Nestle Professional executive Marc Caira.

Marc Caira, the newly appointed president and CEO of Tim Hortons Inc., has proven he can perform in a business crisis of the worst kind.

In 2003, as the newly minted CEO of Parmalat Dairy & Bakery Canada, he increased the company’s profitability while the parent company – Italian food giant Parmalat Finanziaria SpA – melted down under the heat of an accounting scandal that was compared to Enron.

Caira hired forensic accountants to ensure the Canadian books were clean, reorganized and streamlined operations to improve profitability, and led the company to a banner 2004, according to a news report at the time.

“A leader who has survived a crisis has had his mettle tested. That can be very positive when you look at where Tim Hortons is at, in terms of the strength of the competition out there and the foray into the U.S.,” said Liane Davey, vice-president in Knightsbridge Leadership Solutions.

Caira’s appointment was announced Wednesday, after a long search, and against the backdrop of a predicted, but still disappointing first quarter. He will take over from executive chairman Paul House in July.

House will become non-Executive Chairman of the Board of Directors at that time. Caira will also stand for election as a director at the annual meeting of shareholders.

Caira, 59, was most recently Global CEO of Nestlé Professional, a food supply company with 10,000 employees and operations in approximately 100 countries.

He was a member of the Executive Board of Nestlé SA; chief operating officer of Parmalat Canada before taking on the role of CEO, and also served as president, food services and Nescafe beverages for Nestlé Canada.

The fact that he doesn’t have any direct experience leading a fast-food company was raised by an analyst during the earnings call on Wednesday.

“Can you help us understand Marc’s direct experience in dealing with the North American quick-service-restaurant industry?” asked Michael Van Aelst of TD Securities.

Paul House said Caira has worked closely with Tim Hortons for decades, having been directly involved in the soups and other products that Nestle has developed for Tim Hortons.

“He has a very in-depth knowledge of the food beverage industry, especially hot and cold beverages. He has been a student of our brand for probably 25 years or so,” said House.

Tim Hortons is at a crossroads. The company is nearing 4,000 outlets in Canada. A renewed U.S. expansion, after an earlier, largely failed attempt in New England, is under fire by a hedge fund that wants to shake up the way business is done at Canada’s favourite restaurant chain.

And Tim Hortons announced Wednesday a new agreement that will see it open up to 100 new restaurants in urban areas in Saudi Arabia over the next five years, in addition to a total of 120 in the Gulf States, where performance is exceeding expectations, House said in an earnings call on Wednesday.

Caira is also facing increased competition from existing restaurants like McDonalds and Starbucks and newcomers like Five Guys Burgers; relatively high unemployment in Canada and the U.S. and cautious, heavily indebted consumers.

“There is a difference between being CEO and running a business unit of a bigger organization. It will be interesting to see how he adds on the CEO duties,” said Davey.

“The CEO owns the brand, the culture, investor relations, the perception of the organization among the financial community, the stuff around access to capital, which is essential.

“He has an obligation to the franchisees. There are entrepreneurs across Canada whose livelihood depends on Tim Hortons, and when you think about how many jobs in Canada depend on him winning, it’s a heavy weight.”

Caira lives in Switzerland and is travelling and not available for comment, according to Tim Hortons spokesman Scott Bonikowsky.

“The big concern is that he’s not really coming out of a hospitality industry background. He’s never really run an eatery or a fast food franchise of any type, but that’s not necessarily a bad thing,” said Ken Wong of Queen’s School of Business.

“When you hire a CEO, you’re not hiring someone who knows how to make a doughnut; you’re hiring someone who satisfies some corporate need you may have. He knows how to run things across borders, which isn’t as easy as it seems. That may be the determining quality they are looking for.”

Last week, Highfields Capital, a U.S. hedge fund, began agitating for Tim Hortons to boost returns using share buybacks, while also scaling back on its U.S. expansion plans and spinning off a real estate investment trust (REIT) to house its valuable property assets.

In the earnings call on Wednesday, House said the company remains committed to expansion in the U.S.

Chief financial officer Cynthia Devine told analysts the company is not a good candidate for a REIT because of the nature of the internal structure of the company and the fact that it doesn’t own much of the property where outlets are located.

Shares in the Oakville, Ontario-based company fell 2.6 per cent to $57.13 in Toronto on Wednesday after falling as much as 4.1 per cent earlier, the biggest intraday drop since Nov. 8.

Sales at stores in Canada that have been open more than a year declined 0.3 per cent in the first quarter from the same period a year ago, the company said in a statement with earnings. That was the first drop since 2006, according to data compiled by Bloomberg.

“Obviously they’re not growing as fast as they were when they went public,” Bobby Hagedorn, an analyst with Edward Jones & Co. in said by phone from St. Louis. “When you’re growing faster your younger stores tend to compare a bit better, so you don’t have that tailwind behind you. The market is obviously more competitive than it was.”

Tim Hortons reported net income fell 2.9 per cent to $86.2 million in the first quarter, or 56 cents a share, compared with estimates of 61 cents. Revenue rose 1.4 per cent to $731.5 million, compared with the average estimate of $748.9 million.

With files from Bloomberg

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